Opportunity Cost of Natural Gas Subsidies in Bangladesh

Publication | April 2014

This paper estimates the opportunity cost of underpricing or subsidizing gas in Bangladesh.

The paper examines the impact of optimal gas pricing policy—aligning the price with international market price—together with better gas revenue management regime, in which augmented gas revenue is used to invest in physical and social infrastructure. Inflationary pressures from higher energy prices would be completely offset by positive impacts of infrastructure constraint removal. Optimal gas pricing and investment in infrastructure would benefit all sectors of the economy without any adverse effects on the poor.

Contents 

  • Abstract
  • Introduction
  • Economy-wide Effects of Investing Revenue from Natural Gas
  • Concluding Observations
  • References